Tuesday, December 17, 2013
Sell By the Foot
I have seen this concept applied to condominiums, buying a large building or parcel and selling off separate units. I have used it myself to buy or rent income-producing property by the building, and to lease it out by the room. Many commercial spaces are subdivided this way by artist-developers in creating art space. Time shares, vacation rentals, co-housing and fractionalized ownership models are all applications of this concept. These are but a few examples.
Affordability, as well as potential profit, are by-products of this approach to investing in real estate. Recently, I was hired as a buyers' agent for four friends looking for a nice residential property in Seattle that they wish to purchase as Tenants In Common (or TIC). I refer to them affectionately as "Cuatro Amigos."
These Cuatro Amigos are looking for four or more bedrooms, so that each of them has their own separate space, in addition to nice larger common areas in more desirable neighborhoods than either of them might be able to afford if they were to purchase on their own. They are considering features, such as separate bathrooms, entrances, wings or additional kitchens that can accommodate a communal living arrangement. Each will contribute to the down payment and to the monthly mortgage payments, but in different amounts, reflecting each owner's financial ability and different ownership interests. They also intend to modify percentage of ownership based on the private space each will occupy in the house they purchase.
Tenancy In Common is one way of vesting title or ownership to property. TIC is defined as "a form of concurrent ownership of real property in which two or more persons possess the property simultaneously; it can be created by deed, will, or operation of law."
TIC may come with or without rights of survivorship. This means that when one owner dies, his/her ownership interest may be passed on either to the surviving owners or to the owner's heirs. Legal and tax professionals should be consulted by anyone considering this type of ownership model.
Many different models exist for vesting title or ownership in real estate. Your real estate title and escrow representatives may also be helpful in explaining options to home buyers and investors exploring different possibilities for creative real estate acquisition.
If you are interested in exploring this method for purchasing a primary residence or income property, feel free to send for my FREE special report on Tenants In Common. Contact me at HomeLandInvestment@gmail.com or at 425-270-7292.